Feds Add Obstruction of Justice and a Real Penalty to PG&E Indictment for San Bruno

A new federal grand jury indictment alleges that Pacific Gas & Electric (PG&E) lied about its policy of violating federal regulations and not inspecting some of its oldest and most dangerous pipelines.

The indictment replaces an earlier one in April, adding the obstruction charge and raising from 12 to 27 the number of criminal violations of federal law. PG&E could be liable for $1.4 billion in penalties. The original indictment totaled $6 million.

PG&E was charged with obstruction for allegedly lying to investigators for the National Transportation Safety Board (NTSB) in the aftermath of the 2010 San Bruno pipeline explosion that killed eight people and leveled a neighborhood. Among the documents submitted by PG&E was an internal policy statement that instructed its engineers to not to bother checking pipelines that had experienced pressure surges less than 10% above the federal rule.

PG&E retracted the document, telling the feds that it was just a draft proposal, not policy. The indictment says that is not true. PG&E was operating under that policy at least from 2009 through April 5, 2011.

“The consequence of this practice was that PG&E did not prioritize as high-risk, and properly assess, many of its oldest natural gas pipelines, which ran through urban and residential areas,” according to a statement from the U.S. Attorney’s Office.

The San Bruno blast was caused by a failed pipeline weld that had not been inspected, as required, after gas-pressure surges. The inspections and testing are costly.

The superceding indictment also alleges the utility knew its records, which were critical for testing and upgrading of pipelines, were incomplete and wrong, but didn’t fix them. When serious threats were identified, the company did not respond.

The indictment doubles the number of pipelines where the alleged violations occurred, bringing the total to six.

The non-obstruction-of-justice charges involved violations of the Natural Gas Pipeline Safety Act of 1968 (PSA). Each of the 28 counts carries a $500,000 penalty. PG&E settled civil lawsuits for more than $560 million late last year and still faces fines of up to $2 billion from the state.